How Employee Appreciation Affects Company Culture

Employee appreciation and engagement are more important now than ever, yet some employees still report feeling a lack of recognition from their managers – ultimately negatively impacting company culture.

So why does employee recognition matter? As I wrote previously on our blog, research has shown a strong correlation between employee retention and staff appreciation. Retention can be crucial to the success of a company. When an employee leaves, they take with them valuable information about that role that may or may not get passed onto a successor. Your company also suffers time lost in finding and training new staff to replace them.

To combat low retention, companies have turned to employee recognition programs as a way to recognize staff. These programs, in turn, often have a positive impact on workplace culture – another heavy contributor to an employee’s decision to stay or leave a job.

How We Got Here

Employee engagement and recognition are relatively new concepts to the workforce, and are the result of a few key economic and social factors, according to research by Bersin & Associates.

In their “Employee Recognition Framework,” Bersin & Associates write that many organizations turned to recognition following the economic recession of the late 2000s. With fewer opportunities to offer increased monetary compensation, businesses faced a challenge keeping employees happy – especially those who survived layoffs. Recognition and professional development became clear alternatives for employers coming out of this period.

Bersin & Associates also writes that recognition is essential in the era of the millennial workforce. As the baby boomer generation begins to retire, engagement with younger staff will continue to be key for creating a successful workplace. Increased feedback (both positive and negative) is often associated with this generation along with a less hierarchical and transparent leadership structure. Recognition in the workplace has become a cornerstone for these strategies.

Individual Fulfillment in Workplace Culture

Employee recognition creates a cycle of positive feedback that begins with the individual. When an employee gets recognized for their achievements, they feel valued – but what’s more is that they feel like their work matters. According to our “The Surprising Effects of Employee Recognition and Appreciation” report, well-recognized employees rate their enthusiasm for reapplying for their job 32 percent higher than workers who aren’t well-recognized. This signals that recognition, in turn, makes employees have a more positive perception of their role. Bersin & Associates also found that employee engagement was 14 percent higher in organizations that recognize their employees versus those that don’t.

The same Bersin & Associates report mentioned above also utilizes psychology to explain the relationship between employees and their needs at a job. The report cites Abraham Maslow’s Hierarchy of Needs, a pyramid that begins at the bottom with survival, safety, love/belonging, esteem, and self-actualization at the top. The study says that recognition from managers, colleagues and peers can help individuals fulfill their need for the love/belonging part of the pyramid, allowing them to advance to the esteem level. Recognition can again be used to help an individual achieve this need, as praise can help build esteem and confidence. Once all of these needs are fulfilled, the individual moves to the self-actualization level at the top – a place where employees are highly motivated, engaged, and want to advance within the organization.

Essentially, the more individually fulfilled an employee feels about their work, the more likely they will want to stay and grow within their role – and share that positivity with other peers. This effect, in turn, creates for a more positive workplace culture that begins with the individual.

Peer-to-Peer Fulfilment in Workplace Culture

The individualized positivity created by staff recognition has a domino-like effect. These individuals are more likely to view their workplace and peers positively if they are fulfilled in their role. In fact, 13 percent of employees that are well-recognized rate their coworkers 13 percent higher than less well-recognized coworkers.

The strength of these peer relationships plays a crucial role in how staff view their workplace culture – even more than other workplace perks. We found that 70 percent of employees credited their peers for creating an engaging environment, while perks such as work functions, parties, or amenities only accounted for 8 percent.

Public-facing peer recognition provides employees the opportunity to recognize their peers in a very open way. As we found in “The Beginner’s Guide to Great Leadership,” when given the opportunity, 44 percent of employees organically give each other recognition on a daily basis. By providing a public forum for this, managers create a culture of open and supportive communication where staff feel as though their voices are heard. That the same study found that workplaces with these programs enjoyed a 31 percent lower voluntary turnover.

Transparency in Workplace Culture

The creation of this open communication, in turn, establishes trust and transparency not only among peers but in their relationships with managers and leadership. Confidence and trust in organizational leadership were found to be a main indicator of employee engagement, according to one study. Employee recognition, and the transparency it can create, is crucial to workplace culture.

This public-facing recognition strategy also allows employees to send and receive recognition on a level playing field that everyone can see. This visibility and empowerment, writes Dr. Paul Gadie, builds trust that can be leveraged in workplace culture. Gadie also writes that receiving this recognition in the “public square” creates positive reinforcement. Employees and their peers are likely to repeat these behaviors if they are seen in a public light.

Engaging staff with the selection and implementation of recognition strategies increases transparency while also empowering staff. By being a part of the decision making process for employee recognition, these strategies seem more authentic. Staff are also more likely to participate in a program that they feel partial ownership over.

Meaning in Workplace Culture

All of the employee recognition factors described above, in turn, can create a deeper feeling of meaning in workplace culture. Employees who are intrinsically motivated by their work feel fulfilled by companies that have a centralized meaning for the work they’re doing. Employees who are extrinsically motivated, although different, can share in this enjoyment, as it gives context to the work they are doing from an outside point-of-view. This deeper meaning should originate with your organization’s mission or company values. With the usage of recognition, these ideals can be lived out in your culture as well.

How much does meaning actually affect workplace culture? The data shows that, similar to transparency, there is a close relationship between the two. The ADP RI report found that 82 percent of employees worldwide want to play a meaningful role in their organization. This meaningful connection to work was found to be related to staff’s relationship to their peers, managers, and whether their feedback was taken seriously by employers. These relationships and the communication within them are influenced by employee recognition.

The motivation of finding deeper meaning in a job, however, is often compared side-by-side with monetary incentives. Is this deeper happiness with a job really a match for monetary motivation? “According to Mihaly Csikszentmihalyi, a distinguished Hungarian psychologist, being able to enjoy your work is the main factor in getting into a state of flow. Flow: The experience you have when you are ‘in the zone.’ You feel fully focused, creative, and ideas are flowing freely,” according to an article by University of Southern California. This feeling of “flow” ultimately contributes to higher productivity. Although salary is a crucial indicator of job satisfaction, those who enjoy their roles – and the deeper meaning within them – are more likely to be productive and stay in their current role.

As Liz Alton writes, “Ongoing recognition starts with a culture that acknowledges contributions.” Solid peer-to-peer and employee-manager relationships start with a priority on recognition. This, in turn, can create positive views on roles, open communication, transparency, and a deeper meaning in your workplace that ultimately define its culture.

As your company navigates a job market that frequently requires more agility, consideration of company culture is paramount. Employee appreciation, as we’ve shown, is a crucial ingredient to preserving culture, and ultimately, staff retention. Although many of the factors mentioned above are codependent on one-another, the root of creating positive workplace culture starts with establishing a norm of recognition and appreciation.